The freeway was originally California Highway 17, and the road from the end of I-880 south to Santa Cruz still bears that name. The northern part was upgraded to US Interstate status in 1986 to secure increased federal funding.

The 1989 Loma Prieta Earthquake caused the collapse of a section of double-decker freeway in Oakland during the evening rush hour, crushing 42 commuters. Afterwards, that entire section of freeway was demolished, and the freeway rerouted through a different part of west Oakland and rebuilt as a single level road. It took almost eight years to reopen that 5 mile section to traffic - during the meantime commuters had to detour via Interstate 980 to Interstate 580 to Interstate 80, through Oakland's infamous MacArthur Maze.

The southern section of I-880 also spent much of the 90's under construction, being widened and having carpool lanes added. Work still continues on improvements in Santa Clara County where the interchange with California Highway 237 is being rebuilt and the freeway is being widened to 6 lanes through San Jose, with completion of those projects expected by late 2004.